To successfully predict important events, the representations in memory on which we rely need to be constantly updated and transformed to best reflect a complex and dynamic world. Here we employed a novel paradigm to investigate how memories of threat learning affect the flexible recombination across distinct but overlapping experiences, an ability referred to as relational memory. Participants (n=35) visited the lab to first encode neutral associations (A - B), which were reactivated and predictively associated with a new aversive or neutral element (B - C) on the following day, whilst pupil dilation was measured as an index of arousal. Then, again one day later, the accuracy of relational memory judgements (A - C?) was tested. Novel association to threat was found to impair relational memory. Unexpectedly, this effect was not moderated by arousal. We propose that compartmentalization of threat learning events could be a function of a healthy memory, preventing maladaptive ‘episodic overgeneralization’ of threat to previously encoded episodes.